Judge Jacqueline P. Cox - Opinions / Outlines

Judge Jacqueline P. Cox

03 B 46296

Plaintiff in a state court alter ego action against two principals (and a Judgment Creditor of the debtor) of a corporate chapter 7 debtor filed a motion to dismiss the debtor’s case or in the alternative, lift the automatic stay to permit the state court action to proceed. Noting that corporate chapter 7 cases have very limited purposes and that they do not demand the type of reorganizational analysis required in a chapter 11 or chapter 13 case, the court held that the debtor’s case was filed in “bad faith” and dismissed it for “cause.” The court concluded that the case served only to stay Plaintiff’s collection efforts, was an unfair litigation tactic designed to delay the Plaintiff’s state court alter-ego claim and that it was an attempt to shift the dispute, which could be resolved in state courts, to a bankruptcy forum.

03 B 29854, 03 A 03732

Ex-wife of a solvent chapter 11 debtor, who was a resident of Texas, moved to dismiss his case for “cause” pursuant to 11 U.S.C. § 1112(b), alleging that the debtor did not file his case in good faith. She also requested dismissal, or transfer of the case for improper and inconvenient venue under 28 U.S.C. § 1408(1) and Bankruptcy Rule 1014(a), to the more convenient forum of the Northern District of Texas. The court found that the debtor’s case was filed with the intent to delay his ex-wife from exercising traditional state law collection rights stemming from a state court judgment while he was attempting to collaterally attack the state court judgment underlying her claim. The court held that “cause” existed under 11 U.S.C. § 1112(b) to dismiss the bankruptcy case because it was not filed in “good faith.” The court additionally held that “cause” existed under 11 U.S.C. § 349(a) for dismissal with a one year bar to refiling a bankruptcy case because the debtor’s behavior showed a tendency toward recycling his contentions and interpretations of law rejected by one court to another court (in either the state or federal system) that lacked appellate jurisdiction over the rulings of which he complained.

In re Mary Will
November 20, 2003

02 B 36426

Although finance company’s allowed secured claim was paid in full in a prior chapter 13 case, which was later converted into a chapter 7, it refused to release the lien. After receiving a discharge in the chapter 7 case, the debtor filed another chapter 13 case but did not schedule the finance company as a creditor because it was her belief that the debt had been extinguished in the prior case. Having no notice of the new case, the finance company repossessed the vehicle and claimed that a fully secured balance still existed. The debtor filed a complaint against the finance company for damages and turnover of the car and alleged a willful violation of the stay pursuant to 11 U.S.C. § 362(h). The finance company filed a motion to annul the automatic stay and objected to confirmation of the debtor’s chapter 13 plan. The court held that the finance company’s refusal to expeditiously return the car to the debtor once notified of the pending chapter 13 case was a willful violation of the automatic stay. As such, the motion to annul the automatic stay was denied. The debtor was granted costs and awarded attorney fees along with compensatory and punitive damages. The issue involving the objection to confirmation was not litigated.

In re Sandra Lee Wright
October 20, 2003

03 B 02687

Unsecured creditor moved to file a tardy proof of claim and to be included in the debtor’s chapter 13 plan. The creditor alleged that notice of the proof of claim filing deadline was sent to an incorrect address. The court held that it lacked authority under the Bankruptcy Code or the Bankruptcy Rules to grant the creditor’s request to file a late claim. The court further held that the Due Process Clause did not provide an equitable exception to the otherwise strict terms of the chapter 13 claims bar date because the Bankruptcy Code, when construed as a whole, provides other forms of relief to creditors who do not have actual knowledge of a bankruptcy case in time to exercise procedural rights essential for protecting their claims.

In re Evelyn Watkins
August 22, 2003

03 B 21660

Secured creditor filed a motion requesting relief from the automatic stay in order to pursue its state law rights and remedies with respect to the debtor’s car that was stolen and totaled pre-petition. It additionally requested an order pursuant to Bankruptcy Rule 9013 directing the insurance company to pay it the full settlement amount in order to fulfill the pre-petition state-court judgment denying declaratory relief in favor of the debtor. The debtor argued that the attorneys’ fees incurred due to her attempt to collect the insurance proceeds should be paid out of the proceeds because her attorney is entitled to a superior equitable lien against the proceeds as a result of their contingency-fee agreement. The court held that full faith and credit must be afforded to the state court judgment in favor of the secured creditor on the issue. The court lacked subject-matter jurisdiction to consider the argument under the Rooker-Feldman doctrine. The court also held that the debtor could not claim a wild-card exemption in the insurance proceeds; nor could the debtor attempt to avoid the lien under 11 U.S.C. § 522(f)(1). The motion to modify the stay was granted.

03 B 07231

A chapter 7 debtor moved to compel mortgagee to enter into a reaffirmation agreement that alleged, among other things, that his mortgage payments were current. Mortgagee filed a cross motion for modification of the automatic stay, which alleged a default on the mortgage, that the debtor had no equity in the real property and that the property was not necessary for an effective reorganization. The cross motions raised the legal issues of whether a chapter 7 debtor may retain his home against the objection of the mortgagee by simply remaining current on payments, or conversely, whether a mortgagee should be entitled to foreclose in pursuit of its in rem claim against real property only because the debtor-mortgagor obtained a chapter 7 discharge of personal liability. The court held that: (1) the debtor was required under 11 U.S.C. § 521 to elect between reaffirmation, redemption and surrender and then perform the intention within 45 days thereafter; (2) that the court could not force the Mortgagee to enter into a reaffirmation agreement; and (3) that relief from the automatic stay was appropriate and would not be much of an additional burden on the debtor.

02 B 41591

Tax sale purchaser obtained a tax deed for property owned by the debtor and transferred the tax deed to a land trust for the benefit of a third party. The debtor’s interest was not recorded. The third party used this interest to secure a loan with a finance company. The finance company moved under 11 U.S.C. § 362(d) to annul the automatic stay in the debtor’s chapter 13 case for “cause” in order to validate the tax deed that was issued while the stay was in effect. The court held that: (1) as the holder of both the legal and equitable title to the real estate, the debtor had a property interest that became part of her bankruptcy estate in spite of the fact that her legal interest had not been recorded until 2 years after the pendency of a prior chapter 13 case; (2) the filing of the application for an order issuing the tax deed by the tax sale purchaser and the issuance of the tax deed were willful violations of the automatic stay because the tax purchaser knew of the debtor’s unrecorded interest due to her efforts to negotiate with the tax purchaser; and (3) that equity did not clearly favor annulment of the automatic stay.

Pages